Amazon.com, Inc. (NASDAQ:AMZN)and Google Inc (NASDAQ:GOOG) are set to feel the heat from a parliamentary committee in the United Kingdom over payment of taxes lower than what they were liable for.
A report by Reuters said that UK's public Accounts Committee had asked senior officials of the companies to make a deposition on November 5.
The Internet giants have been criticised in recent months for making substantial sales in the country but paying only a small amount in taxes, sometimes as little as 1.5 percent on hundreds of millions of pounds of earnings, Macworld reported.
According to the report, Google had paid about 8 million pounds in corporation taxes in the U.K. in the six years through 2010. Online retailer Amazon is "asking its publishers to pay a full 20 percent of VAT on eBook sales in the UK - even though it only has to pay 3 percent to the Exchequer because it is based in Luxembourg," it said.
Exchequer secretary David Gauke recently said in the House of Commons that the country's eBook market was valued at 140 million pounds in 2011, but he admitted that the Treasury had no idea about how much tax was being paid by the companies concerned on these sales.
Gauke said: "A large proportion of this business is supplied from abroad. Therefore, no reliable estimate has been possible for the value of VAT levied on the sale of e-books purchased in the UK."
Recently auction site eBay had also come under scrutiny as it had been paying only 0.15 percent of tax on sales worth some $798 million in the country in 2010, the report said.
If the company had followed standard corporation tax guidelines, it would have had to pay $51 million in taxes instead of the $1.2 million that it did pay.